1. Supply Chain Management
Corina Botnarevschi, Ehab Etani,
Akbar Khan, Amir Garranah

2. It started with a handshake. Two visionaries, Bill Bowerman
and his University of Oregon runner Phil Knight, thought
they could do a better job of designing and selling shoes to
runners. They were right.
Today NIKE, Inc. is the world’s leading innovator in athletic
footwear, apparel, equipment and accessories.

3.  World largest seller of footwear, sportswear, clothing and
sports equipment supplier
 Headquarters – Oregon, USA
 Sponsors many high-profile athletes and sports teams
around the world.
 Nike has extremely strong supply chain relations

4. • Elevating product excellence and innovation at the factory
level.
• Helping to lead industry efforts to integrate sustainability
into product creation and manufacturing.
• Managing sourcing through a balanced approach, taking
into account environmental, social, quality and cost impacts.
• Developing and testing new models of manufacturing that
serve to improve worker compensation, skills and livelihood.
• Consulting with, coaching and building capacity with contract
factories to optimize labor and environmental capabilities.

5. Profile of NIKE, Inc. Contracted Factories Globally by Product Engine, Region and Fiscal Year
Region Total Apparel Equipment Footwear
FY09 FY10 FY11 FY09 FY10 FY11 FY09 FY10 FY11 FY09 FY10 FY11
Americas 161 202 189 118 135 117 24 26 25 19 41 47
EMEA* 115 99 78 70 67 53 33 26 18 12 6 7
N. Asia 517 508 471 268 244 217 170 172 156 79 92 98
S. Asia 241 203 192 175 149 142 35 30 29 31 24 21
Total 1,034 1,012 930 631 595 529 262 254 228 141 163 173
* Europe, Middle East and Africa

6. Globally, Nike have moved toward establishing long-term relationships
with fewer factories as trusted partners, rather than having short-term
transactional relationships with a larger number of factories.
Nike Supply Chain

7. drives innovation. And if done effectively, managing diversity and
working together can lead to a competitive advantage
Favorable impacts on our business by:
• Creating more competition in the supply chain
• Maintaining a connection to the consumer base
• Providing economic stimulus to the community
• Contributing to the enhancement of our brand
Nike`s goal is to offer suppliers real procurement opportunities as they
arise, and all purchasing is done in a competitive marketplace.

8. • Nike has a reputation for designing not manufacturing their products,
the manufactures are outsourced
• Nike hired subcontractors (are individuals who performs a specific
task as part of the overall project and is normally paid for services
provided to the project by the originating general contractor) in
China, Indonesia, Vietnam and Thailand
Why?
to reduce costs or to mitigate (Reduce) project risks
• As well as independent factories in Argentina, Brazil, India and South
Africa to manufacture their products

9. • The reason for outsourcing is lower wages and lower costs of
production than its in the United States
• This strategy resulted in cash savings generating more profit
• In the these countries employees put 40 to 50 hours of
overtime per month
• It is widely reported that workers earned below the minimum
wage of 45$ per month

10. • Labor costs in the US are much higher
• The cost of production for labor manufacturing is lower than in
the US.
• Cost of Shipping goods has dropped, because of the improved
efficiencies in shipping technologies.
• Free Trade agreements between north America and other
international countries.
• Reduced costs for consumers

11. • Overhead reduction, which is what every profit making company will
look to achieve
• Efficiency, Nike became more efficient through outsourcing to
cheaper countries.
• According to Thomas Business News, the estimates for Nike firm in
key outsourcing areas can be as high as 75%
• This permits firms to lower prices and become more competitive
• The main advantage of outsourcing is that organizations are able to
concentrate their efforts in their core competencies like marketing,
designing and new product development thus creating competitive
advantage.

12. Vertical integration – Nike's operations are vertically integrated with a
presence in every segment of the value chain from manufacturing down to
sales.
- Vertical integration that exists in the supply chain is between the
suppliers, manufacturers, distributors and retailers.
Nike makes sure that all the firms are in a close working relationship.
Nike occasionally sends Research and Development staff to various
production factories in order to ensure that there is smooth production of
the products thus avoiding any miscommunications that might threaten
relationships when they arise.

13. • Nike manages demand for its products by use of futures
program that requires retailers who stock Nike’s products
to order 80% of their inventory six months in advance in
order to be guaranteed delivery.
• According to the futures ordering system (Innovation)
permits Nike to lower levels of inventory held, time spent
in fulfilling retailers’ orders as well as the non delivery risk

14. - is a business system and continuous improvement philosophy that
aims to deliver the highest-quality product while eliminating waste,
including lost time and material.
- Nike Delegated processes that allowed for high dynamic and fluid
markets and flexible production system that is demand driven and
allows for transfer of production from one country to another in less
time.
• Nike introduced a new supply chain that used the just in time
approach to facilitate faster shipment of products to customers in
Europe and America.

16. Nike changed its organizational structure to better integrate
sustainability within traditional corporate functions.
The company uses a matrix organizational structure
• in which managers report to multiple departments. Based
on business unit goals, employees develop strategies
and plans detailing their multidisciplinary responsibilities.
• Internal scorecards are used to report progress towards
the goal.

18. The principles of lean are aligned with sustainability best practices such
as
 Reducing resource use and waste
 Valuing the workforce, and reducing downtime
 All managed under a continuous improvement system
• This can lead to both increased worker satisfaction and gains in
business performance.

19. • Transparency enables collaboration. And collaboration is essential to
building sustainable and self sustaining supply chains.
• Our aim is to build business partnerships characterized by long-
term, trust-based, transparent interactions.
• Nike remain Committed to sharing Data About their suppliers.
• Example
Nike Manufacturing Map

20. At the end of 2011, 80% of footwear, 57% of apparel and
11% of equipment was made at Nike’s contract factories
using processes meeting Nike’s minimum baseline
definition of lean.
In addition to their phenomenal sales, Nike has marketed
itself so thoroughly that it has literally become a household
name.

21. • The company has no control of the inventory since it has
too many suppliers.
• The company does not own any manufacturing plants &
focuses on outsourcing production
• Uses a large range of In developing countries where low
wages and child labour conditions are being adopted

22. • Over the years Nike has taken it’s toll of criticism over
these issues
• In response they have set out a new code of conduct
• All suppliers have to comply with code with the help of
training from Nike adhering to society’s/customer’s
expectations and standard. In an aim to heighten CSR.
• In some products cases there are some expensive
technical components and their implementations

23. • Nike’s supply chain technology consists of Electronic
Data Interchange (EDI) which transmits the data between
different companies using networks, such as VAN or the
Internet; Value Added Network (VAN)
• To run their supply chain, Nike’s uses HP servers, this
technology helps Nike review its supply chain past
performance, monitor current performance and predict
when and how much of certain products need to be
produced.

24. • Besides monitoring current and past performance
activities, Nike’s advancement in technology has allowed
them to fully enhance their supply chain to create trail
from the consumer’s, address purchasing shoes on the
Nike home page to the supplier’s required to bring
together the components of the customized shoe.
• The information trail from IT allows planning, tracking and
estimating lead times based on real data which is
accessible in the system where managers analyze, plan
activities and make decisions based on information from
the entire supply chain.